Wither the Beauty Contest Analysts?

Keynes on Market Speculation:

"Professional investment may be likened to those newspaper competitions in which the competitors have to pick out the six prettiest faces from a hundred photographs, the prize being awarded to the competitor whose choice most nearly corresponds to the average preferences of the competitors as a whole; so that each competitor has to pick, not the faces which he himself finds the prettiest, but those which he thinks likeliest to catch the fancy of the other competitors, all of whom are looking at the problem from the same point of view." "It is not a case of choosing those which, to the best of one's judgment, are really the prettiest, nor even those which average opinion genuinely thinks the prettiest. We have reached the third degree when we devote our intelligences to anticipating what average opinion expects the average opinion to be. And there are some, I believe, who practise the fourth, fifth and higher degrees." -Keynes, John Maynard. "The general theory of employment, interest and money." London : Macmillan, St. Martin's Press, 1936. page 156.

As the polls narrow, it is comforting for Kerry supporters to see a tightening of the spread of the Iowa Presidential Market as well - further evidence that the senator from Massachusetts is closing fast. But the predictive power of the market system has been trumpeted by many as superior to traditional opinion polls. Certainly the following is not an original take, but I have yet to see it elsewhere in direct reference to this cycle, so let me recycle old man Keynes' point. If you look closely at the Iowa Market curve, it actually shows a LAG behind the movement of the race, instead of what Keynes would anticipate for a sophisticated market. A smart investor would of course predict bumps post-Conventions, for example, or (less obviously) a Kerry rally after debate #1 and adjust expectations accordingly. Instead, we have a predictable curve that is even inflated beyond the point of reasonableness. True students of past races would have been able to short-sell these patsies for a laugh. The telling aspect is that this particular market has behaved in a terribly reactive fashion, reflecting the polls rather than helping to offer insight. Maybe the volatile nature of this Presidential election is responsible, but to date this experiment has failed to inspire me with any confidence that it offers anything more than Zogby's "creative" tracking polls. On these numbers I think Bush is too high - and will fall some after debate three. You are the economist - what do you think? Should we just attribute this as a failure of the investors to engage in the 3rd and 4th level analysis that the beauty pageant requires?